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Interconnected Economies

Benefiting from Global Value Chains

Global Value Chains (GVCs) have exploded in the past decade and refer to the international dispersion of design, production, assembly, marketing and distribution of services, activities, and products. Different stages in the production process are increasingly located across different economies, and intermediate inputs like parts and components are produced in one country and then exported to other countries for further production and/or assembly into final products. The functional and spatial fragmentation that has occurred within GVCs has significantly reshaped the global economic landscape, thereby raising some new major policy challenges for OECD countries and emerging countries alike: trade policy, competitiveness, upgrading and innovation and the management of global systemic risk.

Implications of global value chains for trade policy

This chapter describes the challenges that global value chains (GVCs) present for traditional trade policy and the main trade policy implications of the increased fragmentation of production. It aims to clarify concepts, offer new policy insights, and help policy makers to see new issues that require special attention in a context of global production networks.